This article examines what is driving Singaporean demand in UK real estate amid global geopolitical uncertainty, and what makes the UK attractive?

The following article is from Astrid Stanley (pictured below), commercial real estate partner at law firm Howard Kennedy. She notes that there is increasing appetite from Singaporean investors in UK real estate across all asset classes, but in particular in the living sector. Despite evolving geopolitical and regulatory/planning challenges, Stanley thinks that the UK real estate is in a prime position to attract Singaporean money.

While domestic UK investors might be concerned about the policy direction of the country, astute foreign counterparts can gain a sense of perspective, predicting what might happen three to five years ahead, for example. Stanley argues that Singapore, in particular, has historically shown an interest in trophy asset classes such as prime Central London offices. This interest is spreading to encompass the full gamut of assets including the living sector (co-living, build-to-rent, purpose built student accommodation etc) as well as emerging sectors such as data centres.

The editors are pleased to share this content; the usual editorial disclaimers apply to views of guest writers. To comment, email tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com

Astrid Stanley

Singaporean appetite for UK real estate remains resilient. Even amid global geopolitical uncertainty, high construction costs and a shifting regulatory environment, investors continue to view the UK as one of the world’s most stable and strategically compelling destinations for long-term capital deployment.

However, entering or expanding within the UK market is not straightforward. With increasing planning unpredictability, tightening building safety obligations and unfamiliar legal concepts, success now depends on deeper due diligence, more hands-on asset involvement, and early multidisciplinary advice.

Drawing on key conversations happening in the market currently and our client experiences, this article explores what drives Singaporean demand, where investment interest is strongest and what international investors need to know as the UK’s regulatory environment evolves.

1. What is driving Singaporean demand in UK real estate?

First and foremost, the UK is known as a relatively stable economy. Despite global macro volatility, the UK continues to offer a predictable legal system, underpinned by a strong rule of law and a transparent market. We have found that for Singaporean investors, who typically value clarity and enforceability, our economy provides a level of stability that remains highly attractive relative to other global markets.

The UK also has an open stance towards foreign capital entering the UK. We continue to have a welcoming attitude to overseas investment, with no political barriers for Singaporean capital. In an environment where several jurisdictions are tightening foreign ownership rules, this openness is a competitive advantage and one that we are aware of is key to this government and previous UK administrations.

As such, UK real estate still proves to be a valuable asset. Whilst there is little doubt that rising construction costs and inflationary pressure have impacted project viability, many assets, especially in regions outside London, still offer compelling value when compared with prime Singapore or other Asian gateway cities.

In our experience, Singaporean investors tend to take a strategic, cyclical perspective. The focus is often on income-producing assets or development opportunities that will generate stable returns once the current market recalibrates and, as such, there is a longer-term view which tends to work well with the UK economy, which does experience peaks and troughs.

2. Where are Singaporean investors deploying capital in the UK real estate market?

There are several sectors that tend to be key for the Singaporean investors that we have been working with: 

-- Offices: Provided that they are high-quality stock in proven locations, offices are still of interest and can provide great yields. Clearly covenant strength remains key and due diligence into any tenants is a must. However, other factors that can impact on the success of an asset include transport links and local amenities; and 
-- Living sectors – Purpose-built student accommodation ("PBSA"), build to rent ("BTR") and co-living: Demand for PBSA remains particularly resilient due to structural undersupply and strong international student demand. BTR also appeals to Singaporean investors seeking steady income and professionalised management. With the living sectors, location is paramount and, as a result, this could be a competitive market to enter at the right price due to the high demand.  

One of the critical points to bear in mind when looking at UK real estate assets is that there are regional variations that are difficult to appreciate virtually. Visiting assets reveals contextual neighbourhood dynamics, regeneration momentum and intangible characteristics that online data cannot convey. We would always recommend relying on a solid professional team that understands the area and can advise investors properly on rental performance, planning culture, infrastructure, local politics and demographic trends as these can vary enormously across regions.

Additionally, it is also crucial to consider the opportunities of the asset as opposed to how it is currently operating. Many offices for example are attracting opportunistic capital focused on refurbishment, repositioning and ESG-driven upgrades. If you can make the numbers work, buying stock that you can invest in could be advantageous to your balance sheet after a number of years. 

3. Navigating the UK’s regulatory and planning flux

Whilst there is no doubt that the UK is a strong market to invest in, real estate is not without its challenges. When considering investing, some points to consider include: 
 

Planning uncertainty

The planning regime in the UK is undergoing significant reform to ensure that the regime provides clarity, certainty, flexibility and speed. Currently, backlogs, political shifts and policy changes mean that planning timelines are unpredictable and costly. We would always recommend that you obtain advice from planning advisors early on to help navigate you through the system.
 

Building safety obligations

Since the [UK] Grenfell tragedy, the government has introduced legislation which demands higher standards and wider obligations for owners and developers. Whilst the new legislation was welcomed to ensure the safety of occupiers, the market itself and the regulators have struggled to keep up with the applications and certifications needed. This has led to delays and therefore impacted on developments. 

Furthermore, the liability position for investors has changed. Legislation can now potentially "pierce the corporate veil" to extend liability to certain associated companies not involved in the original construction. There are specialist advisors that can help investors and developers at every stage of a building's lifecycle; we would strongly recommend working with these specialist teams to ensure that any investor is on top of any compliance requirements.
 

Unfamiliar legal concepts

This might seem like an obvious point, but the law is different in the UK. There are legal concepts in the UK that may not be familiar elsewhere. These can be complex; for example, should a development block an adjoining owners' rights of light, the developer might need to demolish the building or pay compensation. We have freehold and leasehold structures together with a soon-to-be-further-legislated commonhold structure. The title to much of the real estate in the UK is not necessarily simple and can include restrictive covenants, which relate to a deed from hundreds of years ago!

There is also a requirement for overseas entities that hold real estate in England and Wales to register the corporate buyer at Companies House. This involves identity verification of the various entities that have a certain level of interest in the corporate structure and involves a reporting process that must be repeated at least annually. We would always recommend that you talk to us in respect of acquiring any property. We can guide you through not only the process but the legal concepts using straightforward language. 

 

4. Mitigating risk through structure, partnerships and strategy

As a new investor in the market, there are always ways to mitigate risks, and our top tips would be: 

-- Joint ventures with trusted partners: For new entrants or those taking on more complex developments, joint ventures with local partners provide access to expertise and on-the-ground capability; 

-- Early tax advice: The UK tax regime for overseas investors has changed significantly. Early planning helps manage SDLT, capital gains, income tax, financing and withholding obligations; and 

-- Building the full advisory team: Integrated planning, tax, legal, building safety, surveying and asset management advice is now essential.

So, what’s next?

Every jurisdiction has its complexities and challenges, and the UK is no different. However, what the Singaporean investors value and what we can offer is our transparent, stable and strategically valuable market. The UK is a hub for many investors, families and companies and, as such, demand for education, housing and business continues to grow. This means that the need for real estate continues to grow, resulting in a market that continues to be strong in times of uncertainty.